Handspring Is Set To Challenge Palm - Twice

Handspring Is Set To Challenge Palm

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The highly successful Palm handheld will face a new challenger, as Handspring releases today its first handhelds based on the Palm operating system to be sold under a competing brand name.

Handspring, based in Moutainview, Calif., announced it will begin delivering two of its three Visor-brand devices to Best Buy, CompUSA and Staples, marking its formal entry into retail. The Visor was previously sold only on the Internet.

The units will carry a $179 suggested retail price for the basic Visor with PC cradle and $249 suggested retail for the Visor Deluxe -- the same prices the Visor is now sold for on the web. The Visor Solo (sold without cradle) will continue to be offered exclusively on the Internet at handspring.com for $149, a spokesman said.

The three retailers will also carry Handspring's Springboard line of Visor add-on modules, which have become the signature differentiating point between the Palm and the Visor line. Visors each have a proprietary expansion slot for options, including a modem, flash memory, and in the future, modules for GPS, MP3, digital cameras and Bluetooth capability.

Kevin Winneroski, mobile computing senior buyer for Best Buy, said he sees the Visor attracting new customers into handheld computing.

"We don't really see the Visor competing at all with growth we've seen in other PDAs," said Winneroski. "There's plenty of room for more players in the market. We see Handspring as bringing something exciting into the marketplace, because at $179 and $249 you get features that will be attractive to a certain buyer, like the color cases and the fact they work with the Springboard modules."

The Visor will be available at some point in the second quarter, he said, in all 357 Best Buy stores.

NPD Intelect, Port Washington, N.Y., said total dollar sales for PDAs surged 60% in 1999, reaching $436.5 million, while International Data Corp. (IDC), Framingham, Mass., is predicting unit sales for PDAs of 3.4 million in the U.S., up from 2.3 million in 1999, or 47.8% growth for this year.

Handspring's move to brick & mortar has been anxiously awaited by many retailers, who are curious to see how the brand will compete against the Palm.

Stores ranging from J&R Computer and RCS, both in New York City, such e-tailers as Value America and MobilePlanet, and cellular phone stores such as e-phones said they are eager to the carry the brand.

"I would like to be one of the first online retailers with it because of its price/value," said Paul Ewart, executive VP for Value America, Charlottesville, Va. "You get a lot of functionality for less than you would pay for a Palm. I believe the Visor could be another hit."

Dina Gaphe, marketing VP for MobilePlanet, said, "The Handspring Visor is a great product and very competitively priced. We're interested in the fact that it is upgradable and expandable and has a standard operating system that's been proven. It's not some new organizer at $99 [without] expandability. It's the Palm OS and slightly enhanced to be a little faster, and it has the ability to upgrade using the Springboard modules."

The Visor began selling online in October as the up-and-coming competitor to the Palm. But some retailers and industry observers said the product has lost much of its price advantage over the Palm since that time and that it now comes to retail having lost some valuable momentum.

"They lost out on some exposure since they announced the product back in October," said Anees Khan, handheld product manager for RCS. "The product hype was tremendous, but they had no retail stores to go to. Also they had a price advantage."

The price of the lowest-cost Palm in November was $179, while the IIIe (with cradle) now has a suggested retail of $149, the same as the Visor Solo.

Nonetheless, industry members, including RCS, said the Visor could prove to be a strong seller.

IDC senior analyst Jill House said the launch of the Visor at retail "will increase the total number of the Palm OS devices sold while decreasing the Palm brand share. Palm will be able to see if its brand has any cachet or not. If you look at a Visor next to a Palm and all you see is a different color in the case, which will customers choose?"

And while some retailers privately admitted they were angry at being slighted by the Visor's launch at only three retailers, others said they wouldn't mind sitting back to see how the product performs on store shelves.

Tom Fritz, merchandising VP for Micro Center, Hilliard, Ohio, said, "That category is certainly strong for us, and we're always interested in seeing how new entrants do. It may be something we consider down the road."

Handspring could not supply a general retail release date.

The Handspring launch comes at a time when the handheld category is booming, at least for the Palm OS-based products, and shortly before Microsoft is expected to launch a new version of its Windows CE-based product under the new name of the PocketPC.

Many retailers said they are facing shortages due to high demand for such products as the Palm VII, Palm V and Casio E-105.

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